What needs to be in a business plan?
A business plan is a summary of how a person or business intends to become organized and how they plan to implement the activities necessary for the venture to succeed.In a business plan you set objectives, establish priorities, and provide for cash flow. It is a written explanation of the company's business model. You need a business plan if you are going to run a business. A business plan is like the map and compass for your business.
Business plans are used both internally for management and planning purposes as well as externally.They may be used to convince banks or investors to loan money or for grant proposals as well.A business plan is also prepared for customers because they need to know whether or not the product serves the purpose and the utility of the product.It is also necessary for the government to know whether the legal economical and subsidy concerns are met.
Business plans can quickly become outdated.One common belief is that the actual plan may have little value, but what is more important is the process of planning, through which the manager is better able to understand the business and its processes.
A business plan is not so much about the quality of writing, formatting and pictures as it is about content.Some of the key elements you will want to incorporate into your business plan are:
- Define your strategy. Strategy requires focus. Figure out what you're really selling, who wants it, why they want it and how your business provides something different from the competition.
- Control your destiny. Determine where you want to go and break that down into specific, concrete steps with dates, deadlines and budgets. Don't merely react to events; be proactive and set a roadmap to follow and revise it as things change.
- Plan your cash. You've got to make a good, educated guess, then manage your planned cash flow vs. actual cash flow very carefully. Growth costs money, and profits don't necessarily mean cash, so lay this out in detail. The math isn't hard, but getting your financials organized takes some time and effort
- Allocate resources realistically. This doesn't just have to do with cash, but also with responsibilities.Determine who is in charge.
- Communicate your plan. The business plan is the standard tool for communicating the main points of a business to a spouse, partner, boss, banker, investor, manager or other interested person.Cater your business plan to the individuals that will be receiving it, whether it be internal or external.
To actually write a business plan, there are nine basic components.These are mini-plans that contribute to the big picture of what your business is all about.These components are outlined as follows:
- The Executive Summary: While appearing first, this section of the business plan is written last. It summarizes the key elements of the entire business plan.
- The Industry: An overview of the industry sector that your business will be a part of, including industry trends, major players in the industry, and estimated industry sales. This section of the business plan will also include a summary of your business's place within the industry.
- Market Analysis: An examination of the primary target market for your product or service, including geographic location, demographics, your target market's needs and how these needs are currently being met.
- Competitive Analysis: An investigation of your direct and indirect competitors, with an assessment of their competitive advantage and an analysis of how you will overcome any entry barriers to your chosen market.
- Marketing Plan: A detailed explanation of your sales strategy, pricing plan, proposed advertising and promotion activities, and product or service's benefits.
- Management Plan: An outline of your business's legal structure and management resources, including your internal management team, external management resources, and human resources needs.
- Operating Plan: A description of your business's physical location, facilities and equipment, kinds of employees needed, inventory requirements and suppliers, and any other applicable operating details, such as a description of the manufacturing process.
- Financial Plan: A description of your funding requirements, your detailed financial statements, and a financial statement analysis.
- Appendices And Exhibits: Any additional information that will help establish the credibility of your business idea, such as marketing studies, photographs of your product, and/or contracts or other legal agreements pertinent to your business.
In summary, a business plan's purpose is to communicate to other's what your business is all about.There are some basic steps to guide you through creating one of your own.